Money Transfer in Ghana Case Study

The introduction of prompt property assistant is taking place in isolation much than all everywhere in reduplicate with the advent and expansion of near other monetary electronic retributions work. One of these is E-Zwich, an electronic platform that changes the loading and spending of electronic cash and also leads the solution of inter- lodge claims in addition to online effects. well-nigh others argon being made available over the Internet and through SMS-text messages. The government regards these advantages as banking.They atomic flake 18 rigorously regulated and licensed by the Central Bank- Bank of Ghana downstairs its branchless banking policy. Both MTN and ZAIN SIM cards atomic number 18 enabled to utilize the work but each new subscriber involves to register for the overhaul at before it is activated. Upon activation, the user is furnishd with a limit electronic wallet where bullion grass be disbursed or uploaded. The users can eithe r exchange electronic property for bodily cash (cash out) at shops, partner banks and accredit agents or call use of it in reservation purchases or points.Enabling a Cash Flow to Rural Areas In general, the about popular peregrine cash service is notes off. The trend is for users in urban atomic number 18as to deepen funds to recipients in rural areas. handed-downly in Ghana, city d healthyers a great deal conduct gold to members of their extended family living in rural areas. Other typical work include the purchase of roving phone air date, goods and operate through electronic transfer of funds from users wallet to the merchants account.Commenting on bills transfer via supple phones, Carl NiikoiAshie, an mcommerce ( roving commerce) specialist at Zain who works on ZAP, tell The guests can cash in by loading money onto their ZAP wallet, then channelise the money to someone else on their phone in a simple process. The person receiving the money can cash ou t by spillage to any of our outlets and exchanging the evalue for physical cash. Were serveing tremendous get downth in the service across the country, with more cash-in done in the major cities bandage cash-outs are seen predominantly in the diminutiveer towns. Ashie sees a lot of evidence that his crossway is reaching Ghanas unbanked. drug users do not need to set about a bank account to use the service. Currently, in that location are a lot of financial legal proceeding that mother place outside the confines of the banks and it will take a product like ZAP to fill the void while providing a capture, satisfactory and trustworthy channel of transaction, said Ashie. Some customers substantiate also requested products that will allow them to use their ZAP wallets for nest egg and wherefore enjoy interest on their savings, just as pertains in the tralatitious bank setting. Today, consumers have a variety of ways to send and receive funds or money transfers. Althoug h using cash to send a money transfer is the most popular method for most commonwealth, more and more people want additional options to send and/or receive funds on the internet, over the phone, and now, on their wide awake phones. lively money transfer is simply another(prenominal) way to send money. It is a transfer of money to a receiver in which the funds are deposited into a fluent or virtual wallet. As the number of fluid phone subscribers in Ghana appends, so does the market for mobile money operate.The majority of Ghanaians lack any formal bank account. mobile money could change the shape of financial transactions in the country. An estimated 80 percent of Ghanaians are unbanked meaning they conduct their transactions outside the banking celestial sphere with no devil to financial go. Products like mobile money, that enable safe and secure money transfers without the use of a bank account, could have a major impact on this unserved segment of the population. Mob ile money gives anyone with a mobile phone the ability to transfer money, progress cash payments and conduct other financial transactions over the phone.Mobile money is a comparatively new phenomenon in Ghana. It was first introduced by the telecom company MTN some years ago. MTN Mobile Money operates in partnership with nine banks. Currently, more than 2 one thousand thousand Ghanaians are registered as active users. MTN expects this number to grow as a result of the resources they have committed to educating subscribers about exchange from the traditional mode of cash payments to electronic payments. Earlier this year, Zain became the second mobile operator to provide mobile money services through the introduction of ZAP, working with three banks.The coverage and access codeibility that mobile services provide is of increasing interest to the financial services sector. Countries are considering mobile applied science to reduce the hail of delivering financial services to clie nts beyond the reach of traditional financial services. ECONOMIC BENEFITS Mobile money transfer has some socio-economic realizes in Ghana, some these are Firstly Improved monetary Access, consider a situation whereby a given business has to carry out a common payment operation, such(prenominal) as bill payment or funds transfer, and that operation demands back breaker with all inconveniences attached to it.If the same transportation cost were paid to a service that would effect the same payment on behalf of the company over the mobile phone or else, this more convenient method brings about saving time and energy for other activities, in so doing increasing productivity by performing two tasks instead of one at the end of the day. It appears, therefore, that using your mobile phone to make payments represents to a very large extent convenience taken to another direct.By exploiting the extensive reach of mobile networks, the mobile industry has the hazard to complement and exten d subsidence channel, make transferring money significantly more convenient and also bring many another(prenominal) people into the formal banking system. With more than 15,000,000 mobile phone subscribers in Ghana, the potential market for these new services is significant. Mobile money presents certain advantages for Ghanaians without access to banks. Penetration of mobile services across the world is increasing rapidly. In 1990 there were just over 11m mobile phone users world unspecific.Today, over 3 billion consumers own mobile phones. At the same time, the possibility to technically integrate mobile and financial services is becoming increasingly apparent. A recent survey conducted by Edgar Dunn & Company and the GSM Association (GSMA) predicts that, given an improved regulatory environment, in 2012 7% of the subscriber base in developed countries and 4% in ontogeny countries will initiate at least one cross-border subsidence. This equates to just over 248 million consume rs in 2012 using mobile money transfer services.Financial access for the poor is still an issue in many ontogeny countries. There are currently approximately only 0. 5 million bank branches globally with only 1. 4 million ATMs compared to over 3 billion mobile customers worldwide. The mobile device has the potential to extend access to financial services for the banked, but also for the under-served and unbanked parts of the population. This improved, financial access can be achieved by exploiting the extensive reach of mobile networks. Traditional remittance channels can be complemented and extended with mobile money transfer services.Thus making mobile money transfers significantly more convenient, bringing many remittances from informal channels into the formal system. Secondly it reduces the transaction cost of money transfers. Bank transfers and specialist remittance companies can be prohibitively expensive for small denomination transfers, limiting the ability of private wor kers to distribute funds to a larger number of people and penalizing those move small amounts. Retail premises and staff cost increase overheads, wind to high commissions, especially for remittances below ghc100.It drastically cuts down the cost of providing service to customers. A study carried out proved that there is a certain cut in customer care cost. This results from the fact that mobile money transfer eliminates the need for costly call centers and frees up customer service help desk. In addition real-time information is provided to customers and employees. Using a mobile platform such as SMS fro simple task as payment reminders and funds transfer can reduce the burden on IT and personal resources. This has also been found to reduce cost and errors associated with paper-base operations.Significant step-down in operational costs means additional revenues can be invested in other areas of the business. Mobile technology can lower the cost of remittances as it removes the n eed for physical points of presence and curbs a timely and secure method of transaction. This conception of mobile money is extremely attractive to low income users in particular Mobile money transfer services can make remittances more kick inable. Mobile technology lowers the cost of remittances as it removes the need for physical points of presence by banks and ensures a timely and secure method of transaction.This concept of mobile money is extremely attractive to low income users in particular. It reduces the transaction costs of financial services for the poor, especially those in rural areas where financial services seldom exist. Mobile money saves the cost of travel and time worn-out(a) visiting the nearest town to access financial services. As far-famed in AudienceScapes research, mobile money provides people with a way to transfer money safely and keep (or even increase) their savings.From the customers perspective, mobile banking is relatively favorable to use, and t his is another advantage compared to traditional means of banking as well as electronic banking, given the fact that text put across has become a common application of mobile phones. Thirdly mobile money transfers get hold of egress and victimisation. Mobile money has the potential to create jobs directly through hiring in the mobile phone companies, partner banks and the more than 4,000 merchants involved in Ghanas mobile money system.Key partners in the provision of mobile money services include commercial banks, mobile phone operators shops, distributor shops and accredited agents. Jobs may be created indirectly as mobile money contributes to growth in Ghanas business and backup. If deployed successfully, mobile money could help individuals harness funds outside the banking system and channel them into the formal financial sector, thus making it easier to gather funds for investments. Not surprisingly, the general manager of Mobile Money-MTN, Bruno Akpaka, sees many do good s for Ghana as it continues adopting this service.Akpaka believes mobile money will help trade activities within the country and foster strong business partnerships. The creation of wide merchant footprints in places where traditional banks cannot go also contributes to bringing people into this new model of financial transactions, said Akpaka. MTN Mobile Money is bridging this live huge gap surrounded by the unbanked and the financial sector. Mobile-financial convergence creates socio-economic benefits. It is widely accepted, that increase access to mobile telephony in developing countries brings considerable benefits to the economies of the several(prenominal) countries.It is estimated that an extra 10 mobile phones per 100 people in a typical developing country lead to an extra 0. 89 1. 210 component part points of growth in GDP per person. In addition, remittances are an important locomotive engine for growth and development in developing countries. The World Bank estima tes that reducing remittance commission charges by 2-5% could increase the flow of formal remittances by 50-70%, boosting local economies. Reducing the cost of sending each individual remittance would encourage the delivery of lower value remittances, at smaller set than todays average transfer of ghc200.Financial regulators have the opportunity to use the development of mobilefinancial convergence to achieve their aims ? ? ? ? New services fissureed to consumers, i. e. mobile money transfer services (innovation) Cheaper prices through more efficient use of the mobile al-Qaida (competition) Across all consumer groups (banked, under-banked, unbanked) Transition remittances from informal to formal remittance channels (more visibility of money flows) Both the mobile and the financial industry benefit from this opportunity to cooperate in new ways providing innovative services to an increased customer base.The challenges facing the market. Access Access to the facilities to receive money is often limited, particularly for the poorest people in more rural areas where the banking sector is under represented and a largely cash-based economy exists. There are currently approximately only 0. 5 million bank branches globally with only 1. 4 million ATMs compared to almost 2 billion mobile customers worldwide. Those who would benefit the most are therefore the least likely to benefit from remittances from migrant workers, locked out of their market through their social, economic and geographical position. price Bank transfers and specialist remittance companies are prohibitively expensive for small denomination transfers, limiting the ability of individual workers to distribute funds to a larger number of people and penalising the poor who can only afford to send small amounts. Retail premises and staff costs increase overheads, steer to a high fixed commission cost per remittance with industry revenues estimated at an average 15% per transaction, increasing to over 25% for remittances below ghc100.Handset operability There are a large number of different mobile phone devices and it is a big challenge for banks to offer mobile banking solution on any type of device. Some of these devices aver Java ME and others support SIM Application Toolkit, a WAP browser, or only SMS. sign interoperability issues however have been localized, with countries like Ghana using portals like R-World to enable the limitations of low end java based phones, while focus on areas such as South Africa have defaulted to the USSD as a fanny of communication achievable with any phone.The desire for interoperability is largely dependent on the banks themselves, where installed applications (Java based or native) provide better security, are easier to use and allow development of more obscure capabilities similar to those of internet banking while SMS can provide the basics but becomes difficult to operate with more complex transactions. There is a myth that there is a c hallenge of interoperability between mobile banking applications due to perceived lack of common technology standards for mobile banking.In practice it is too early in the service lifecycle for interoperability to be addressed within an individual country, as very few countries have more than one mobile banking service provider. In practice, banking interfaces are well defined and money movements between banks follow the IS0-8583 standard. As mobile banking matures, money movements between service providers will naturally adopt the same standards as in the banking world.Security Security of financial transactions, being executed from some remote location and transmission of financial information over the air, are the most complicated challenges that need to be addressed jointly by mobile application developers, wireless network service providers and the banks IT departments. The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wi reless network 1. Physical part of the hand-held device.If the bank is offering smart-card based security, the physical security of the device is more important. 2. Security of any thick-client application running on the device. In sideslip the device is stolen, the hacker should require at least an ID/Password to access the application. 3. Authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions. 4. User ID / Password authenticationof banks customer. 5. Encryptionof the data being transmitted over the air. 6. Encryption of the data that will be stored in device for later on / off-line analysis by the customer. One-time password(OTPs) are the latest tool utilize by financial and banking service providers in the fight againstcyber fraud . kinda of relying on traditional memorized passwords, OTPs are requested by consumers each time they want to perform trans actions using the online or mobile banking interface. When the request is received the password is sent to the consumers phone via SMS.The password is run out once it has been used or once its scheduled life-cycle has expired. Because of the concerns made verbalised above, it is extremely important that SMS gateway providers can provide a befitting quality of service for banks and financial institutions in regards to SMS services. Therefore, the provision of service level agreements (SLAs) is a requirement for this industry it is necessary to give the bank customer delivery guarantees of all messages, as well as measurements on he speed of delivery, throughput, etc. SLAs give the service parameters in which a messaging solution is guaranteed to perform. Scalability & Reliability Another challenge for the CIOs and CTOs of the banks is to scale-up the mobile banking infrastructure to trade exponential growth of the customer base. With mobile banking, the customer may be sitting in any part of the world (true anytime, anywhere banking) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion.As customers will rise mobile banking more and more useful, their expectations from the solution will increase. Banks unable to invite the performance and reliability expectations may lose customer confidence. There are systems such as Mobile Transaction Platform which allow bustling and secure mobile enabling of various banking services. Recently in India there has been a phenomenal growth in the use of Mobile Banking applications, with leading banks adopting Mobile Transaction Platform and the Central Bank publishing guidelines for mobile banking operations.Application distribution Due to the nature of the connectivity between bank and its customers, it would be impractical to expect customers to regularly visit banks or connect to a web site for regular upgrade of their mobile banking application. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches (so called over The Air updates). However, there could be many issues to implement this approach such as upgrade / synchronization of other dependent components.Conclusion. For customers and businesses in the country, it is a unique platform to bring convenience in financial transactions to customers, an area which before this period had been beyond our domain and reach for those of us in Ghana and most of Africa. For the customer, its time and cost saving elements cannot be over emphasized and the earlier we adopt electronic ways of financial transactions, the better it will be for a whole society that would see a transformation, resulting from the ability to cut down on time mazed accessing basic services like funds transfer amongst businesses and individuals.